[Apr-2024] Dumps Practice Exam Questions Study Guide for the IIA-CIA-Part3 Exam
IIA-CIA-Part3 Dumps with Practice Exam Questions Answers
NEW QUESTION # 122
In its first year of operations, an entity had US $50,000 of fixed operating costs. It sold 10,000 units at a US $10 unit price and incurred variable costs of US $4 per unit. If all pnc es and costs will be the same in the second year and sales are projected to rise to 25,000 units, what will the degree of operating leverage the extent to which fixed costs are used in the entity's operations) be in the second yc _u?
- A. 6.0
- B. 2.0
- C. 1 50
- D. 1 25
Answer: C
Explanation:
The DOL may be calculated as the contribution margin sales - variable cost) divided by the excess of the contribution margin ever It <:ed costs. The contribution margin is US $150.000 [25.000 units x $10 unit price - $4 unit variable cost)]. Hence, the DOL in the second year is 1.50 [US $150,000 CM / $150,000 - $50,000 FC)].
NEW QUESTION # 123
Which of the following techniques would be least effective in resolving the conflict created by an internal audit client's perception of the audit report as a personal attack on his management performance?
- A. The auditor should focus on the audit client as a person and understand him, rather than just concentrating on the problem.
- B. The auditor should make recommendations based on objective criteria, rather than based on a subjective assessment.
- C. The auditor should explore alternative solutions to address the audit problem, so the audit client has options.
- D. The auditor should take a flexible position on the recommendations and focus on resolving the issue by addressing the interests of the people concerned.
Answer: A
Explanation:
Explanation
NEW QUESTION # 124
A firm must decide the mix of production of Product X and Product Y. There are only two resources used in the two products, resources A and B. Data related to the two products is given in the following table:
What is the appropriate objective function to maximize profit?
- A. 8X + 6Y
- B. 2X + Y
- C. 3X + 7Y
- D. 5X + 8Y
Answer: A
Explanation:
The objective function is the function to be optimized. This firm wishes to maximize profits
on the sales of two products (X and Y). Based on profits per unit (US $8 and US $6, respectively), the objective function is 8X + 6Y.
NEW QUESTION # 125
Which of the following sites would an Internet service provider most likely use to restore operations after its servers were damaged by a natural disaster?
- A. Cold site.
- B. Warm site
- C. Hot site.
- D. On site.
Answer: B
NEW QUESTION # 126
In a database system, locking of data helps preserve data integrity by permitting transactions to have control of all the data needed to complete the transactions. However, implementing a locking procedure could lead to:
- A. Deadly embraces retrieval contention
- B. Unrecoverable transactions
- C. Inconsistent processing
- D. Rollback failures
Answer: A
Explanation:
In a distributed processing system, the data and resources a transaction may update or use should be held in their current status until the transaction is complete. A deadly embrace occurs when two transactions need the same resource at the same time. If the system does not have a method to cope with the problem efficiently, response time worsens or the system eventually fails. The system should have an algorithm for undoing the effects of one transaction and releasing the resources it controls so that the other transaction can run to completion.
NEW QUESTION # 127
According to UA guidance on IT, at which of the following stages of the project life cycle would the project manager most likely address the need to coordinate project resources?
- A. Monitoring.
- B. Initiation.
- C. Execution.
- D. Planning.
Answer: D
NEW QUESTION # 128
If an entity has a higher dividend-payout ratio. then. if all else is equal, it will have a:
- A. Higher marginal cost of capital.
- B. Lower investment opportunity schedule.
- C. Higher investment opportunity schedule.
- D. Lower marginal cost of capital.
Answer: A
Explanation:
The higher the dividend-payout ratio, the sooner retained earnings are exhausted and the entity must seek external financing. Assuming the name investments are undertaken, the result is a higher marginal coot of capital because lower-cost capital sources will be used up earlier.
NEW QUESTION # 129
Consumer protection regulations have resulted in all of the following except
- A. Food label laws requiring a list of ingredients and nutritional data.
- B. Rules allowing the award of monetary damages to persons injured by false and misleading advertising.
- C. Truth-in-lending requirements that lenders must identify the total dollars to be paid by the borrower over the term of the loan.
- D. Product safety laws that establish the liability of producers of unsafe or defective products.
Answer: B
Explanation:
Statutes often provide for regulation of the matters listed in a), b), and d respectively.
To date, no legislation allows the award of monetary damages to persons injured by false
and misleading advertising. However, laws may prohibit unfair or deceptive acts in
commerce including false or misleading advertising.
NEW QUESTION # 130
Which of the following financial instruments can be traded in international money markets?
- A. U.S. Treasury bills.
- B. Mortgages.
- C. Preference shares.
- D. U.S. Treasury bonds.
Answer: A
Explanation:
Funds are borrowed or lent for short periods less than one year) in money markets. Examples of instruments traded in money markets are U.S. Treasury bills, bankers' acceptances, commercial paper, negotiable certificates of deposit, money market mutual funds, Eurodollar market time deposits, and consumer, credit loans. Capital markets trade shares and long-term debt.
NEW QUESTION # 131
Which of the following statements is true regarding the risks associated with the increased use of smart devices at work?
- A. When the user fads to perform jailbreaking or rooting, data security and privacy risks we increased
- B. The global positioning system (GPS) capability of smart devices could be exploited to plan cyberattacks
- C. Due to their small size and portability smart devices and their associated data are typically less susceptible to physical loss
- D. The Bluetooth and WI-FI features of smart devices enhance the security of data while in transit
Answer: B
NEW QUESTION # 132
An individual had taxable income of US $23,r_ir_ir' per year and paid US $8,000 in income tax. The individual's taxable income then increased to US $30,000 per year resulting in a US $10,000 income tax liability. The personal tax system being applied to this individual is:
- A. Proportional.
- B. Progressive.
- C. Regressive.
- D. Marginal.
Answer: C
Explanation:
The average t rate of the individual has decreased from 34.8% US $8,000 - $23,000) to 33.3% (US $10.000 Under a regressive tax system, the average tax rate falls as income rises, although the amount of tax paid may rise.
NEW QUESTION # 133
Under a value-added taxing system:
- A. Businesses must pay a tax only if they make a profit.
- B. The consumer ultimately bears the cost of the tax through higher prices.
- C. Consumer savings are discouraged.
- D. The amount of value added is the difference between an organization's sales and its cost of goods sold.
Answer: B
NEW QUESTION # 134
When managing cash and short-term investments, a corporate treasurer is primarily concerned with:
- A. Maximizing rate of return.
- B. Liquidity and safety.
- C. Minimizing taxes.
- D. Investing in government bonds since they have no default risk.
Answer: B
Explanation:
Cash and short-term investments are crucial to an entity's continuing success. Sufficient liquidity must be available to meet payments as they come due. At the same time, liquid assets are subject to significant control risk. Therefore, liquidity and safety are the primary concerns of the treasurer when dealing with highly liquid assets. Cash and short term investments are held because of their ability to facilitate routine operations of the entity.
These assets are not held for purposes of achieving investment returns.
NEW QUESTION # 135
The allocation of general overhead costs to operating departments can be least justified in determining:
- A. Costs for making management's decisions.
- B. Income tax payable.
- C. Income of a product or functional unit.
- D. Costs for the federal government's cost-plus contracts
Answer: A
Explanation:
In the short run management decisions are made in reference to incremental costs without regard to fixed overhead costs because fixed overhead cannot be changed in the short run. Thus, the emphasis in the short run should be on controllable costs. For example, service department costs allocated as a part of overhead may not be controllable in the short run.
NEW QUESTION # 136
In a diluted earnings-per-share computation, outstanding options issued by the reporting entity are assumed to be exercised. If the exercise price of these options exceeds the average market price, the computation would:
- A. Fairly present diluted earnings per share on a prospective basis.
- B. Reflect the excess of the number of shares assumed issued at the average market price over the number of shares assumed issued at the exercise price.
- C. Fairly present the maximum potential dilution of diluted earnings per share on a prospective basis.
- D. Be anti dilutive.
Answer: D
Explanation:
Options and warrants instruments that give the holders the right to purchase ordinary shares of the entity) issued by the reporting entity are assumed to be exercised at the beginning of the period or at time of issuance, if later. The proceeds are assumed to be from an issuance at the average market price for the period. The difference between 1) the shares issued and 2) the shares that would have been issued at the average market price is an issue for no consideration. If the options are in the money exercise price is less than average market price), they are dilutive because 1) exceeds 2), and the excess will be added to the BEPS denominator. However, when the exercise price exceeds the average market price, the result is ant dilutive.
NEW QUESTION # 137
In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables?
- A. -.89
- B. -.02
- C. 1.03
- D. .75
Answer: A
Explanation:
Because the range of values is between-1 and 1.-89 suggests a very strong inverse relationship between the independent and dependent variables. A value of -1 signifies a
perfect inverse relationship, and a value of 1 signifies a perfect direct relationship.
NEW QUESTION # 138
The accountant who prepared a spreadsheet model for workload forecasting left the company, and the accountant's successor was unable to understand how to use the spreadsheet. The best control for preventing such situations from occurring is to ensure that:
- A. Adequate backups are made for spreadsheet models.
- B. End-user computing efforts are consistent with strategic plans.
- C. Use of end-user computing resources is monitored.
- D. Documentation standards exist and are followed.
Answer: D
Explanation:
The accountant's successor could not use the forecasting model because of inadequate documentation. By requiring that documentation standards exist and are followed, the company will enable new employees to understand internally developed programs when the developer leaves the organization.
NEW QUESTION # 139
Companies with decentralized, autonomous divisions that sell their goods and services internally to other divisions of the company as well as externally in competitive markets have to establish transfer prices for the goods and services transferred internally among divisions. Generally, upper management has established such operating criteria for managing the divisions as goal congruence, subunit autonomy, and a sustained high level of management effort. An approach consistent with the above criteria would be to set the transfer price equal to the:
- A. Additional outlay cost per unit incurred to the point of transfer plus the opportunity cost per unit to the buying division.
- B. Variable cost per unit incurred to the point of transfer.
- C. Additional outlay cost per unit incurred to the point of transfer plus the opportunity cost per unit to the supplying division.
- D. Full cost per unit incurred to the point of transfer plus a percentage markup on the full cost per unit.
Answer: C
Explanation:
The outlay costs represent cash outflows related to the production and transfer of goods/services. The opportunity costs are the maximum contribution forgone by the supplying division if the good/services are sold internally. An opportunity cost will exist if the supplier has no idle capacity and an external market exists_ Thus, this guideline should promote goal congruence actions of the divisional manager benefit the company and the division) a sustained high level of managerial effort exertion toward a goal), and subunit autonomy freedom in decision making). The guideline will vary depending on whether an external market exists and whether the supplier has idle capacity.
NEW QUESTION # 140
COBIT is targeted at all of the following except:
- A. Shareholders.
- B. Management.
- C. Auditors.
- D. Users.
Answer: A
Explanation:
COBIT is targeted at three distinct audiences: management, users, and auditors. Management must balance risks and control costs in the volatile IT environment. Users need assurance about the security of, and controls over, internal or third-parry IT services. Auditors must be able to support their opinions conveyed to management and others about the state of internal control. Because shareholders are not directly involved with IT services used in the day-to-day management of an organization, they are not a targeted audience of COBIT.
NEW QUESTION # 141
On the year-end financial statements, the company will report cost of goods sold of:
- A. US $900,000
- B. US $670.000
- C. US $440,000
- D. US $620,000
Answer: C
Explanation:
Cost of goods sold equals begin rag inventory. plus purchases. m us ending inventory.
Hence cost of goods sold is US $440,000$ 140.000 + $530.000 - $230,000).
NEW QUESTION # 142
The economic order quantity Q is the size of the order that minimizes total inventory costs.
These costs, which are composed of ordering and holding costs, can be computed using the following expression:
The following inventory information is available for an organization:
If the organization decides to order 4.000 units at a time rather than 2.000 units by hour much will its total inventory costs change?
- A. US $1,000 decrease.
- B. US $1,000 increase.
- C. US $900 increase.
- D. US $500 increase
Answer: D
Explanation:
When the order size is 2.000 units, the variable inventory costs are US $2.000 {[(2,000 units $1) - 2] -I- [(20,000 units - 2,000 units) $100]}. When the order size is 4,000 units, the variable inventor -.costs are US $2,500 1[(4,000 units $1) - 2] + [(20,000 units - 4,000 units) $100]}. The increase in inventor-.j costs is US $500 $2.500 - $2,000).
NEW QUESTION # 143
An organization with global headquarters in the United States has subsidiaries in eight other nations. If the organization operates with an ethnocentric attitude, which of the following statements is true?
- A. Orders, commands and advice are sent to the subsidiaries from headquarters.
- B. Standards used for evaluation and control are determined at local subsidiaries, not set by headquarters.
- C. People of local nationality are developed for the best positions within their own country
- D. There is a significant amount of collaboration between headquarters and subsidiaries.
Answer: A
NEW QUESTION # 144
What is the primary purpose of an Integrity control?
- A. To ensure data processing is complete, accurate, and authorized.
- B. To ensure data being processed remains consistent and intact.
- C. To ensure the output aligns with the intended result.
- D. To monitor the effectiveness of other controls
Answer: A
NEW QUESTION # 145
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